A sales tax is a tax on the sale of personal property or taxable services, such as a tax placed on the sale of a candy bar in a store. This tax is usually applied to the sale at the final point of purchase, which is when it is purchased by the consumer.
A use tax is a tax on goods that are purchased outside the taxing authority’s jurisdiction and then brought into the jurisdiction. A use tax applies to the storing, using, and consuming of tangible personal property. A typical use tax is levied on a car purchased out-of-state when it is registered in the state.
Each state and locale has a different sales and use tax rate. The amount of tax you pay is generally a function of the amount and value of tangible property you sell, store, or use.
Sales of tangible personal property to someone else are presumed to be taxable unless the sales tax laws specifically exempt it. However, sales of services are presumed to be non-taxable unless the sales tax laws specifically include that service.
Use taxes are assessed and due on the personal property or service when the sales tax has not been paid. This tax is designed to discourage the purchase of products that are not subject to a sales tax.
State and/or local tax jurisdictions execute compliance audits to verify that the tax accountability you reported and payments made represent your financial commitments.
A business that fails to follow a jurisdiction’s laws may be found guilty of tax evasion, and will be subject to interest payments, penalties, property seizure and imprisonment as a result. Therefore, it is essential to keep adequate records because you are required to pay the correct amount of tax and account for your business purchases and sales, it is essential to keep adequate records.
Sales/use tax laws are very complex and confusing. To make matters worse, every state has different sales and use tax laws and different appeal processes. A business attorney can help you understand your state’s sales and use tax laws and help you comply with the tax rules and regulations. Additionally, a lawyer can help you contest the amount of tax due or bring an appeal.